DEALBOOK; UBS Awards $26 Million To Investment Bank Chief

By JULIA WERDIGIER

Published: March 15, 2013

UBS said on Thursday that it had awarded its new investment bank chief, Andrea Orcel, 24.9 million Swiss francs, or $26 million, in deferred cash and shares, to compensate him for pay he forfeited when he left Bank of AmericaMerrill Lynch.

The amount dwarfs the 8.87 million francs the bank paid to its chief executive, Sergio P. Ermotti, in 2012.">

LONDON — UBS said on Thursday that it had awarded its new investment bank chief, Andrea Orcel, 24.9 million Swiss francs, or $26 million, in deferred cash and shares, to compensate him for pay he forfeited when he left Bank of AmericaMerrill Lynch.

The amount dwarfs the 8.87 million francs the bank paid to its chief executive, Sergio P. Ermotti, in 2012.

“In line with market practice, he received awards as a replacement for deferred compensation and benefits forfeited by his previous employer as a result of his joining UBS,” the bank wrote in its annual report, which was released on Thursday. Mr. Orcel’s cash and share awards will vest over the next three years, and UBS did not disclose his 2012 compensation.

Banks have come under pressure, especially in Switzerland, to curb lavish paychecks and better link pay with performance. Swiss voters approved changes to executive pay two weeks ago, including giving shareholders a vote on how much a company’s board and management can earn.

The changes, which are scheduled to become law by next year, could also keep banks from paying executives before they start their jobs and once they leave a firm, so-called golden handshakes and golden parachutes.

Mr. Ermotti, who took over as chief executive at the end of 2011, hired Mr. Orcel to return the bank’s investment banking business to profitability. To repair the investment banking business, UBS has adopted a plan to eliminate 10,000 jobs and scale back its debt-trading business while focusing on activities that are less capital intensive. The unit had a pretax loss of 2.73 billion francs last year.

Mr. Orcel had worked for 20 years at Merrill Lynch, which became part of Bank of America after a merger driven by the financial crisis. The deferred payout he received included 6.36 million francs in cash and UBS shares valued at 18.5 million francs when they were awarded.

Mr. Ermotti succeeded Robert J. McCann, the head of the wealth management operation for the Americas, as the highest paid board member in 2012. Mr. McCann earned 8.55 million francs last year, down from 9.18 million francs in 2011.

The bank’s total bonus pool fell 7 percent, to 2.5 billion francs, from 2.7 billion francs a year earlier. UBS said it clawed back about 60 million francs in awarded compensation from staff members linked to a rate-manipulation scandal.

This is a more complete version of the story than the one that appeared in print.

PHOTO: UBS paid Andrea Orcel, its new investment bank chief, $26 million in luring him from Bank of America Merrill Lynch. (PHOTOGRAPH BY OLIVIA HARRIS/REUTERS)

UBS said on Thursday that it had awarded its new investment bank chief, Andrea Orcel, 24.9 million Swiss francs, or $26 million, in deferred cash and shares, to compensate him for pay he forfeited when he left Bank of AmericaMerrill Lynch.

The amount dwarfs the 8.87 million francs the bank paid to its chief executive, Sergio P. Ermotti, in 2012.">